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ERCOT summer power capacity tight but 'sufficient,'report says

http://www.chemnet.com   Mar 04,2015 Platts
Texas' main grid operator forecasts hitting a new record peak demand this summer, and extreme conditions could require planned outages, a new report shows, but the operator says it has "sufficient ... capacity to serve forecasted peak demands."

The Electric Reliability Council of Texas preliminary Seasonal Assessment of Resource Adequacy for summer 2015 indicates that total resources, including the amount of wind that could reliably be called upon, would exceed expected peak demand by just 7,911 MW, which is about 11.5% of the expected peak demand of 69,057 MW. ERCOT's target planning reserve margin is 13.75%.

ERCOT's all-time record peak demand is 68,867 MW, set August 3, 2011.

ERCOT North Hub July-August futures were up about 50 cents to $50.25/MWh at 2:30 pm EST on the IntercontinentalExchange.

ERCOT estimates peak demand based partly on weather experienced over the past 12 years. If summer heat boosts demand as much as it did in 2011, and if forced outages top the 90th percentile, the amount of reserves available could fall to 468 MW, the SARA states in one of its scenarios. The summer SARA covers the months of June through September.

If ERCOT's physical responsive capability falls below 1,750 MW and the grid cannot maintain a power frequency of 59.8 Hertz, ERCOT protocols require the issuance of an Energy Emergency Alert Level 3 notice. To maintain reliability across the grid, operators maintain an electric frequency as close to 60 Hertz as practical.

Howard Gugel, director of performance analysis at the North American Electric Reliability Corporation, has said that an EEA 3 notice indicates that "firm load interruptions are imminent or in progress."

But in a media call Monday afternoon, Warren Lasher, ERCOT director of system planning, said an occurrence of extreme temperatures and extreme forced outages is a "one in a hundred" situation unlikely to occur this summer.

"The ERCOT region is expected to have sufficient installed generating capacity to serve forecasted peak demands in the upcoming summer season," the SARA document states.

ERCOT meteorologist Chris Coleman said "a preliminary look at the upcoming summer season shows, once again, a lack of support for a strongly hot season."

Below-normal temperatures have a chance to occur in East Texas, while above-normal temperatures mostly would be restricted to West Texas, he said.

"Also, signs point toward more drier-than-normal potential than wetter than normal," Coleman added.

The precipitation forecast is important because one capacity reduction is the outage of three R.W. Miller natural gas-fired steam units that have a summer capacity rating of 403 MW, the summer SARA notes "are now on extended outage due to lack of cooling water."

ERCOT expects new capacity additions this summer to include the gas-fired Goldsmith Peaker project, with a summer rating of 294 MW, plus 345-MW of new summer peak wind capacity. Under ERCOT rules, summer peak capacity percentages used for wind resources are 12% of nameplate capacity for non-coastal resources and 56% of nameplate capacity for coastal resources.

But "based on ERCOT's drought-risk analysis, no other changes to unit capacities due to drought conditions are anticipated or reflected in the summer assessment at this time."

AUGUST PANDA II START COULD MITIGATE LATE SUMMER RISKS

One factor that could mitigate any risks in late summer is the projected August start of commercial operations at the 758-MW Panda II power plant in Temple, Texas. ERCOT resource adequacy manager Pete Warnken said Monday the gas-fired combined cycle plant could not be counted in the preliminary summer SARA because ERCOT rules require that only units available June 1 be counted as available.

The Cross-State Air Pollution Rule went into effect January 1 and the Mercury and Air Toxics Standards will go into effect April 15, except for resources that have not received extensions, but "ERCOT does not anticipate changes to available generation capacity for the summer season" because of these new environmental rules, the preliminary summer SARA states.

Lasher acknowledged that 69,057 is the largest summer peak projected so far for a seasonal assessment, and it reflects expectations for normal weather, therefore indicating increased demand from economic and population growth.

One factor that has driven Texas economic growth over the past several years has been increased oil and gas drilling activity, but the drilling rig count in Texas has fallen 37% since Thanksgiving. Nevertheless, Warnken said, "We haven't seen a dropoff in energy consumption associated with oil-and-gas industry demand."

ERCOT plans to release its final summer SARA in May.

The grid operator also released its final spring SARA Monday, which states that ERCOT expects "to have sufficient installed generating capacity to serve forecasted peak demands with expected generation outages in the upcoming spring season."

ERCOT expects to have 76,619 MW of generation capacity in March through May, compared with expected peak demand of 61,957 MW, leaving an excess of almost 23.7%. Even under extreme circumstances regarding unplanned outages and demand, the capacity available as operating reserves would still total about 5,160 MW, the spring SARA states.

Coleman forecast slightly below-normal temperatures this spring for the Rio Grande River area of Texas stretching as far north as Midland in the west and Victoria on the Gulf Coast. The other areas are likely to have near-normal temperatures for March through May, Coleman said.

Regarding precipitation, Coleman forecast below-normal rainfall across most of the state, except for slightly above-normal rainfall westward of a north-south line drawn through Midland, Texas.
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